Deal Could Make Philadelphia a Fertilizer Shipping Hub

In what could signal an energy corridor south of the Walt Whitman Bridge, a Houston energy-transportation company has signed a long-term lease with the Philadelphia Regional Port Authority to ship dry bulk commodities -- initially fertilizer -- into Pier 122, a strategic finger pier on the Delaware River between Packer Avenue Marine Terminal and the proposed Southport Marine Terminal at the eastern end of the Navy Yard.

US Development Group L.L.C., which primarily uses rail to move liquid hydrocarbons such as crude oil and ethanol from producers to end users, such as refineries, is taking over a 20-year lease from Growmark Inc., a Midwestern agricultural co-op that ships imported fertilizer through the Camden port and ultimately to U.S. farmers.

Northeast Energy Terminal, a wholly owned subsidiary of USDG, plans to build a conveyor system to connect Pier 122 to nearby storage-silo domes.

USDG, backed by Energy Capital Partners and Goldman Sachs, also has signed a lease with Conrail for about five acres that contain the silo domes and have rail access.

The plan is to bring 60,000 tons of fertilizer annually into the pier, said Robert Blackburn, Regional Port Authority (PRPA) senior deputy executive director.

Currently, the fertilizer travels by barge from Trinidad to Camden and is trucked to Pennsylvania and stored in the domes until it is ready to go to distributors and farmers.

"It was important to Growmark to maintain our fertilizer distribution there," said Rod Wells, a Growmark division manager in Bloomington, Ill. "We felt that somebody else would have more expertise to fully develop the site. USDG has the capability to make more of that port facility.

"We're really good at fertilizer, and moving fertilizer, but that facility can't make it on just fertilizer," Wells said. "There needs to be other products, other businesses, that we just don't have the expertise to tackle."

USDG bought the domes and a loading crane from Growmark, with plans to grow the dry bulk commodities business, said Kevin LaBorne, USDG's vice president of business development. Dry bulk cargoes, such as coal, ore, grain, and road salt, are shipped in large, unpackaged amounts.

Will USDG eventually bring liquid hydrocarbons to the Philadelphia terminal, as well?

"Anything we do in the future that involves expansion of Pier 122, or the property there, would be done very much with the port's support and would be complementary to their long-term development plans," LaBorne said. "We don't have any specific plans. We are focused right now on the dry bulk business and servicing Growmark."

But more energy-related development could be in the offing.

In 2013, the PRPA signed a long-term lease with Eco-Energy Inc., of Franklin, Tenn., to use the south side of Pier 124, next to Pier 122. Eco-Energy also leased land near Pier 124 from CSX to construct a rail and tank facility to bring ethanol by train from the Midwest.

The ethanol would be unloaded into tanks at the CSX site and taken either by truck or pipeline to barges on the Delaware, and then to refineries in the region, Blackburn said.

Eco-Energy plans to build a pipeline from the tank farm, under a new road that has been built from Delaware Avenue into the Southport site, and out to the pier on the river, Blackburn said.

Fifteen companies have expressed interest in all, or part, of the 200 vacant acres known as Southport, which is just south of Piers 122 and 124. The PRPA is evaluating the proposals.

Among those expressing interest was Philadelphia Energy Solutions, operator of the former Sunoco refinery, which wants to develop an energy port with a wharf to handle oil tankers.

Philip L. Rinaldi, chief executive of Philadelphia Energy Solutions, has said he envisions building units to produce liquid fuels from shale gas and to make urea ammonium nitrate fertilizer from natural gas at the refinery.

USDG, whose closest East Coast facility is in Jacksonville, Fla., was interested in Pier 122 for "its great location" with deep water access, a dock, multiple railroad carriers, and proximity to I-76 and I-95, LaBorne said.

"It's a good deal for us because they bring financial strength and a commitment to the port and connections in the dry bulk industry that we anticipate will result in an immediate increase in dry bulk tonnage coming into Pier 122," Blackburn said.

Under the lease terms, USDG will pay a $240,000-a-year base rent, plus an annual Consumer Price Index increase, and additional revenue based on the tonnage of dry bulk cargoes, the port authority said.

"We're going to grow our business there," USDG's LaBorne said. "It's exciting for us to be a tenant of a port that has a vision for long-term growth, and we very much want to be part of that growth."